~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

[Year 1997]
[Year 1998]
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Vietnam business hub eyes the future

HO CHI MINH CITY - Pessimists predicting the end of the Asian ``miracle''should avoid Vietnam's Ho Chi Minh City.
Despite the growing impact from the regional financial crisis on the former Saigon, Vietnam's hub for business, style and sleaze still oozes a vibrancy that officials believe will keep the city's economic engine humming.
Residents wield a can-do attitude that highlights how bad things once were in this southern city of five million people.
``Fifteen years ago if I dropped a grain of rice off my plate I'd pick it up off the ground,'' says Thanh Tung, a musician and restaurant owner.
Then, the city suffered from the dead hand of socialist central planning and a disastrous attempt to collectivise southern Vietnam's agriculture after communist forces defeated the U.S.-backed Saigon regime in 1975.
After finally emerging from decades of war, famine and bankruptcy stalked Ho Chi Minh City.
Now the place is ablaze with neon and the focus for investment, tourism and Vietnam's lucrative commodities trade following economic reforms adopted in the late 1980s.
Even though foreign investment in the metropolis has plunged this year, the city's economic growth hit 9.1 percent in the first half of 1998 compared with the same period last year -- a figure most cities in the world would die for.
Vietnam's commercial capital also accounts for a whopping 30 percent of the country's output, underlining its strategic importance to the communist leadership in Hanoi.
Per capita income stands at $1,000, way above Vietnam's national average of just over $300. Local officials target per capita income of $1,500 in 2000 and more than $4,000 in 2010.

HO CHI MINH CITY BLESSED WITH ADVANTAGES

Le Thanh Hai, vice chairman of the Ho Chi Minh City People's Committee, or local government, acknowledges the negative impact from falling foreign investment and export growth.
Local media has also reported extensively on foreign firms laying off workers in the city.
But there was room for optimism, Hai told Reuters.
He said industrial growth was solid while capital investment in non-state enterprises was booming.
Asked about the city's exports, where overall growth fell 0.6 pct in the first half of the year compared with the same period in 1997, Hai said once Hanoi-controlled enterprises were stripped from the equation, shipments were sailing along.
Exports in the city's home-grown industrial sector grew by 18 percent in the first half of 1998, while shipments from foreign-invested firms rose more than 45 percent, Hai said.
``We believe this city can overcome its difficulties and maintain good economic growth,'' he said.
Economists also point to a ``parallel'' economy that revolves around an informal financial sector which helps grease the city's wheels. Because Vietnam has come off such a low base in the past 10 years, there was also plenty of momentum left in the city despite the fall off in foreign investment, they added.
And there is the human factor. Southerners, accustomed to a free-wheeling economy before and during the Vietnam War, regard themselves as smarter at business than northerners, who have been steeped in a culture of state ownership.
Nevertheless, sustained growth depends on how long Asia takes to emerge from its misery and whether Vietnam can extract the feared bureaucracy from the hair of frazzled foreign investors and mobilise domestic resources.

CITY SKYLINE TAKES SHAPE

The city is also marking its 300th anniversary this year.
While Vietnam traces its history back 2,000 years, Ho Chi Minh City was part of the Kingdom of Champa until 1698, when ethnic Vietnamese laid claim to what was just an outpost on the Saigon River, some 45 nautical miles from the ocean.
Ho Chi Minh City today sprawls out from large boulevards. Glass-encased buildings reach for the sky, offering stunning views of the country's largest port, which hugs a bend in the Saigon River as it flows through the city.
This urban development has attracted property companies from around the world, although business has slowed amid the Asian economic crisis.
Richard Whybrow, country manager at property consultants Jones Lang Wootton, said Asia's woes held a silver lining for the city because it had halted many speculative projects.
``There was a lot of speculation in the gaining of licenses for property development and if these had gone ahead there would have been massive problems. If the Asian crisis hadn't hit there would have been a frightening amount of oversupply,'' he said.
Whybrow said there was 50 percent vacancy across the market in occupancy of office buildings for Ho Chi Minh City and it could be at least 12 months before the rate fell significantly.
Some 10 office block projects were on hold, he added.
One project that has gone ahead is a $650 million Taiwanese development comprising an export processing zone, a 350-megawatt power station, office blocks, residential units and four schools.
Located 20 minutes from the city centre, the project will eventually create jobs for 500,000 people, said Lawrence Ting, chairman of Taiwan's Central Trading & Development Corporation, the project's investor.
Ting said there had been plenty of interest in the development, which took shape in 1993 and should be completed in 10 years. The venture offered a one-stop service for businesses and exporters, Ting added.
He said nearly $500 million had been spent so far on the project, with the export processing zone already breaking even. The whole project should break even in two years, he added.

By Dean Yates - Reuters - September 07, 1998.